The OFT’s eight-month study into the corporate insolvency regime has found
that the current system fails to protect secured creditors sufficiently, and
raised concerns about insolvency practitioners’ (IPs’) actions in certain
circumstances.

An industry-funded independent complaints handling body should be introduced,
with broad powers to review IP fees and actions, impose fines, and return
overcharged fees to creditors.

The Insolvency Service should be repositioned as the dedicated oversight
regulator of the other licensing bodies, withdrawing its role as a direct
regulator of IPs, the report also recommends.

“Smooth entry and exit of firms is an important feature of a competitive
economy, and while we have found that the corporate insolvency market works well
in supporting this outcome in the majority of cases, unsecured creditors are
insufficiently represented and protected,” said Clive Maxwell, OFT senior
director of services.

“Our recommendations, if enacted would benefit both the wider economy and
good insolvency practitioners, without imposing burdens on the taxpayer.”